Welcome to The Happy Finance Company, where we make navigating the world of home loan interest rates a breeze! If you're a current homeowner or aspiring to be one, understanding interest rates is crucial to your financial happiness. Here, we'll break down the fundamentals of home loan interest rates in a way that's easy to grasp, ensuring you're always in the driver's seat of your homeownership journey.

What are home loan interest rates?

Let's start with the basics. Home loan interest rates represent the cost of borrowing money from a lender. At The Happy Finance Company, we believe in keeping things simple, so here it is in plain English: when you take out a home loan, the interest rate is the fee you pay for the privilege of borrowing that money. Interest rates are typically expressed as a percentage.

Who sets the stage?

Now, you might wonder, who's in charge of these rates? Well, that would be the Reserve Bank of Australia (RBA). The RBA sets the cash rate each month, and lenders and credit providers take cues from this rate to create their own rates. However, lenders can adjust their rates each monthindependently of the cash rate.

See how different interest rates will impact your repayments

Use our home loan repayment calculator to work out what your Principal & Interest repayments would be.

Your personal rate recipe

Why do some people qualify for a lower interest rate while others get a higher one? Think of it as a personalized recipe. Lenders consider various factors to determine your interest rate, such as:

• Loan to Value Ratio (LVR)
• Income and financial commitments
• Lifestyle and living expenses
• Credit rating
• Deposit amount
• Current loans and debt
• Existing assets
• Property type (investor or owner-occupier)
• Repayment type (Principal & Interest or Interest Only)

We know it might sound like a complex recipe, but don't worry! Our team at The Happy Finance Company is here to help you find the perfect rate that suits your unique situation.

Why low interest rates make you happier!

A low-interest rate home loan is like finding the cherry on top of your favorite dessert. It means you pay less interest with each monthly repayment, saving you thousands every year and tens of thousands over the life of your loan. Let's put it in perspective: with a loan of $371,100 (the average Australian home loan amount), reducing your rate from 5.67% to 3.64% could save you up to $162,458 over a 30-year loan. Now, that's something to smile about!

But wait! There's more

Is the lowest rate always the best? Not necessarily. It's essential to consider additional fees and charges that can sneak into your loan's total cost. Depending on your needs, some loan features might be worth a slightly higher interest rate, such as the option to make extra repayments or having an offset account. We're here to help you crunch the numbers and find the perfect recipe for your unique scenario.

Paying the interest bill

There are three main ways you can pay the interest on your loan. Click on each to learn more.

Understanding the rate rollercoaster

Interest rates can be a bit like a rollercoaster, with ups and downs. These fluctuations happen due to factors like inflation, economic conditions, and the Reserve Bank of Australia's cash rate changes. The RBA adjusts the cash rate to maintain economic stability, prosperity, and employment levels. They raise rates to slow down a growing economy and lower them to stimulate growth when necessary.

The real deal - Comparison Rate and AAPR

When comparing loans, it's essential to look beyond the interest rate. Consider the comparison rate and the Average Annual Percentage Rate (AAPR). The comparison rate includes interest and other fees, providing a more accurate picture of the loan's actual cost. The AAPR goes even further by factoring in honeymoon rates, ongoing fees, and introductory offers.

Switching to a lower interest rate loan

Wondering if you can switch to a lower interest rate home loan? It depends on your individual circumstances, including your current rate, Loan to Value Ratio (LVR), and credit rating changes. But here's the good news: at The Happy Finance Company, we can help you find out if you qualify for a lower interest rate home loan. Our Home Loan Specialists make the process hassle-free, so you can focus on what makes you happy.

You can learn more about refinancing here, or contact us to get started!

Choosing the perfect home loan

Traditionally, choosing a home loan was like searching for a needle in a haystack. But not

anymore! We simplify the process. Just tell us about yourself, your needs, and preferences, and we'll match you with the perfect loan. We handle the hard work, from submitting your application to guiding your loan to settlement. Plus, we are here to answer your questions and offer advice every step of the way.